Courcy's Intelligence Brief - 16 & 23 April 2014

Items

• China on best behaviour with India

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  In our 12 March briefing, we suggested that if Bharatiya Janata Party (BJP) leader Narendra Modi were to become Indian prime minister after the conclusion of the ongoing general election, then India’s attitude towards China might be expected to harden.  That remains likely, but China appears to be trying to head this off by continuing to take a soft line towards India in notable contrast to the tough stance it is displaying towards neighbours with which it has territorial disputes in the East and South China Seas.

  In our 12 March briefing we reminded subscribers about various recent border incidents between India and China, particularly the incursion by Chinese troops in April 2013, that Delhi has sought to play down.  This downplaying of the incidents by the government led to fierce criticism from the opposition.  The worry for China is that Modi could change this indulgent approach, not least because of his close ties with Japan, which were developed when he was chief minister of Gujarat.  Nevertheless, as we also noted, Modi is not particularly pro-Western, and he was well treated when he visited Beijing in 2011.  So China has reason to hope, and it appears to be acting accordingly, at least during the current election and in particular with regard to the north-eastern Indian state of Arunachal Pradesh (AP), which China calls South Tibet.

  In the past, China has challenged India’s control of Arunachal Pradesh by, inter alia, opposing visits to the state by Indian prime ministers or presidents.  In October 2009, when Prime Minister Manmohan Singh visited the state, China said that it was “deeply hurt” and complained about his visit to “so-called Arunachal Pradesh”.  The state-run Global Times stated that “India currently occupies 90,000 square kilometres of the area”.  It went on to assert that “the Chinese government and public regard territorial integrity as a core national interest, one that must be defended with every means”.

  Much the same thing happened in December 2013 after a visit to AP by India’s President Pranab Mukherjee and his comment that the state was “an integral part” of India.  After this comment, a Chinese foreign ministry spokesman issued a statement saying: “We hope that India will proceed along with China, protecting our broad relationship, and will not take any measures that could complicate the problem.”  At the same time, the China Daily reported that China had “urged India not to aggravate problems on the border”.

  By contrast, during the present election campaign China was very muted in its response to Modi’s holding of an election rally in AP.  When asked at a press conference on 8 April for a comment on the border issue, China’s foreign ministry spokesman Hong Lei just said that China’s stance “was very clear and did not need further explanation”.  Xinhua said that the border dispute was “left over from history”.  This was remarkably restrained considering that Modi had commented on China’s claims to AP and referred to what he called Beijing’s “expansionist mindset”.

  In another sign this week of China’s determination not to let its relationship with India deteriorate in the same way as its relationship with Japan, on 14 April high-ranking officials from India and China met in Beijing to discuss the “strategic cooperative partnership” between the two countries.  Commenting on the discussions, China’s Deputy Foreign Minister Liu Zhenmin noted that bilateral relations had been very good since the beginning of the year and that they were on “an ascending track”.

  As mentioned at the start, it is clear from recent cross-border incidents (particularly the April 2013 incident) that India does not want to escalate tensions with China, and it is clear from the above that China is keen to keep relations with India on a friendly footing despite incidents such as Modi’s election rally in AP that at other times would have produced a much sterner response.  However, what all this says about India’s long-term strategic orientation is another matter.

  India’s underlying mistrust of China is implicit in India’s strengthening of its infrastructure and defence posture along the border.  Other indicators include the fact that only a couple of months ago India’s Home Ministry issued an advisory to the Petroleum and Natural Gas Ministry saying that it should not award exploration and production contracts to Chinese companies for security reasons.  For its part, China has recently refused India’s request to open a consulate in Tibet.

  For now, however, India is in an enviably strong strategic position.  While it remains close to Russia, and China is being careful not to provoke, New Delhi continues to be courted by the United States, including this week at the sixth round of the India-US East Asia Dialogue in Washington.  At the conclusion of the meeting, a US official noted that his dialogue complements “very nicely” the India-US-Japan trilateral dialogue and that these two initiatives “go a long way” towards tamping down risk to peace and stability in East Asia.  In other words, for the US, India remains a key part of the contain-China policy.  JdeC.

• Rumours of Saudi-Iran talks

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  Opinions about the motivation behind Saudi Arabia’s crackdown on supporters of terrorism and extremist groups is sharply divided: Saudi Arabian media outlets are highlighting Iran and Iranian-supported groups as the real targets, but other Middle Eastern sources suggest that the crackdown is primarily aimed at Sunni extremists and that there is a tentative rapprochement under way with Iran.

  On 14 April, a commentary in the Saudi-owned pan Arab daily Asharq al-Awsat noted that King Abdullah had decreed that the ministries of the interior, foreign affairs, endowments and Islamic affairs, and justice, as well as the grievances council and the general prosecutor’s office, are to form a committee whose job it will be to compile lists of movements and organizations deemed to be terrorist.  Four movements already listed are Yemen’s Houthis, the al-Qaeda-affiliated an-Nusra Front, Hezbollah, and the Muslim Brotherhood (MB).  Of these, the Houthis and Hezbollah are Iranian-backed, and the commentary stated: “The anti-terror law is a response to the real terrorists, those who manufacture terror and export it to other countries, such as Lebanon’s Hezbollah, the Syrian regime and Iran.”

  But the pro-Qatari pan-Arab al-Quds al-Arabi, published on the same day, took a different view, highlighting the targeting of the Muslim Brotherhood (which Qatar supports) and saying: “Rather than confronting the threat of Iranian expansionism…Saudi Arabia has decided to invent an enemy for itself under the name of ‘terrorism’ instead.”

  The pro-Qatari commentary went on to say that by criminalizing the MB and its other anti-terror moves “Saudi Arabia is presenting a new image of itself as a power that is ready to squander Muslim rights.  This is something that Iran has benefited from greatly and has achieved great gains without having to fire a single shot.”

  Other sources believe something more complicated is going on, but that it does indeed involve a tentative rapprochement with Iran.  Those arguing for this interpretation say that the motive is what is happening in Iraq.  Although there is now a general belief that the Assad regime will survive in Syria, there is still a fear that the Sunni jihadist opposition group, the Islamic State in Iraq and Syria (ISIS), will retain control over wide areas of eastern Syria, consolidate its position in western Iraq, where it is said to be making major gains on the ground, and could gain control of oil resources in the north.  In essence, the fear is that radical Islamist terrorists could become embedded in eastern Syria and western Iraq and threaten Saudi Arabia and others from there.  Faced by this threat, some observers believe that Saudi Arabia, the US, and Iran could make common cause together.

  Whether the threat from ISIS establishing a jihadist safe-haven in eastern Syria and Iraq is a realistic one or not, there has certainly been some evidence of Iran seeking to mend fences with Saudi Arabia, and of Saudi Arabia being prepared to listen to these advances.  This is a significant change from the first furious reaction of Riyadh to signs that the US was preparing a rapprochement of its own with Iran following the election of the ostensibly moderate President Hassan Rowhani.

  On 10 April, for instance, Iran’s ambassador to Lebanon, Ghazanfar Ruknabadi, talked openly about an easing of tensions between Iran and Saudi Arabia.  Perhaps even more surprisingly, on 6 April Hezbollah’s Secretary-General Sayyid Hassan Nasrallah said that not only does he support better relations between Iran and Saudi Arabia but that he expects it to happen soon.  The pro-Hezbollah Lebanese daily al-Akhbar has claimed that it knows of secret talks between Saudi and Iranian officials.

  No well-placed Saudi source has confirmed these developments, but it is noticeable that there has been less anti-Tehran rhetoric emanating from Riyadh and Riyadh-backed media outlets in recent months.

  If this is a correct interpretation of what is going on, Washington’s influence will have played its part given the Obama administration’s desire to reduce tensions with Iran and to avoid a clash over Iranian nuclear ambitions.  But King Abdullah is also thought to be in favour of better relations with Iran, and the removal of the head of Saudi intelligence Prince Bandar bin Sultan would aid any such move.  Bandar is a noted hawk on Iran, Syria, and Hezbollah, and he was behind the policy of using jihadist groups in the battle to topple Assad.  His removal could be attributed solely to the failure of his Syria policy (indirectly made public by the 3 February Saudi royal decree criminalizing Saudi citizens for participating in military activities abroad), or there could indeed be something going on between Riyadh and Tehran.

• Little hope for Mideast 'transition countries'

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  The IMF’s Mideast department has just produced a report on “Arab economic transformation amid political transitions – Toward New Horizons”.  It summarizes well the economic dangers faced by the Arab Countries in Transition (ACTs) at a time when the transitions themselves are very unconvincing.  While there may be some progress in Tunisia, Morocco, and Jordan, it is hard to be optimistic about significant economic reform coming soon in Egypt, Libya, and Yemen.

  The key problem remains as it was before the transitions began in 2011, namely the difficulty of creating enough jobs to sustain the growing population.  The problems have included a private sector that lacks dynamism.   Short-comings in trade integration, infrastructure investment, access to finance, and the labour market and education system have also held back private sector-led growth.  High levels of government subsidies have compounded inefficiencies and tied up scarce resources.

  According to the IMF “these problems have become more acute since the onset of transitions in 2011, as popular expectations for better living standards have risen”, and the ACTs have experienced an economic downturn “resulting from transition-related disruptions, regional conflict, an unclear political outlook, eroding competitiveness, a challenging external economic environment in the context of the European crisis, and declining confidence”.

  The problem is that this downturn has worsened the unemployment crisis, which is the single most serious economic/social issue for the ACTs.  According to the report, demographic pressures require growth to be above 6% if unemployment is to be reduced, yet under current projections, GDP growth is likely to average only 4.25% through to 2018.  This means that fewer than 5m jobs will be created when the requirement is for 7m “to reduce the unemployment rate halfway to the average of emerging markets (that is about 8.5%).”

  To close this gap of 2.25m jobs, an annual growth rate of 6.25% is required.

  The IMF stresses the need for governments “to embark on bold reform agendas that will make for more dynamic and inclusive economies, generate more jobs, and provide equal access to economic opportunity for all segments of society”.  Yet there is nothing in the post-Arab Spring Middle East that suggests this is possible, let alone probable.

  NOTE: A good example of the continuing inability of the Middle East to make meaningful political progress is provided by this week’s presidential election in Algeria.

  Although this is the fifth multi-candidate presidential election since independence in 1962, the incumbent President Abdelaziz Bouteflika seems certain to win his fourth term despite not having been able (through ill health) to address the Algerian people for two years.  He won in 1999, 2004, and 2009 with, respectively, 74%, 85%, and 90% of the vote.

  Sources in Algiers seem certain that Bouteflika will win in the first round because the establishment has taken the decision that going to a second round would be disastrous for security.  The expectation of a stitch-up is reinforced by the fact that the ministers of the interior, justice, and communication, as well as the chairman of the Constitutional Council, which validates elections, are all Bouteflika allies from his home province of Tlemcen.

  The two largest parties in the coalition, the National Liberation Front (FLN) and the Democratic National Rally (RND), and the largest trade union, the General Union of Algerian Workers (UGTA), are all campaigning for Bouteflika.  All this has prompted Islamist and democratic parties to call for a boycott of the election on the grounds that the outcome is predetermined.

• Risk pointers

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  *** Hamas threat.  Gaza Strip prime minister, Ismail Haniyeh, said on 15 April that capturing Israeli soldiers was the best way for Hamas to secure the release of prisoners held by Israel.  He said: “Abducting Israeli soldiers is a top priority on the agenda of Hamas and the Palestinian resistance.”

  In June 2006, militants from Gaza captured Israeli soldier Gilad Shalit.  He was released in October 2011 in exchange for 1,027 Palestinian prisoners in Israeli jails.

  *** Turkey and the European Union.  Turkey’s new European Affairs Minister Mevlut Cavusoglu has been saying that he intends to rejuvenate Turkey-EU relations, but few believe he will be successful.

  Turkey has been trying to join the European Union since 1963, and until recently it was serious in the endeavour.  Observers in Ankara, however, now view Turkish-EU relations as being all-but dead.  The technical talks, we are told, are being kept going by both sides simply because neither side wants to be the one to ‘call time’.

  EU high officials no longer believe that Turkey has a European vocation (amongst other things, they cite Prime Minister Erdogan’s increasing authoritarianism, including threats against the judiciary), and many Turkish leaders now believe that Turkey no longer needs the EU.

  *** Japan-South Korea talks make little progress.  On 16 April South Korean and Japanese officials met to discuss the issue of Korean women made to serve in Japanese military brothels during World War II (so-called Comfort Women).  Japan’s position remains that all compensation issues were settled in 1965, but South Korea is demanding more for the 55 surviving comfort women and a more fulsome apology.

  Reports of the meeting say that the two sides “failed to narrow differences”, but another round of talks is scheduled for May, and the hope is that a summit meeting between Japan’s Prime Minister Shinzo Abe and South Korea’s President Park Geun Hye can be arranged.

  Japanese sources say the talks are part of a concerted effort to improve Seoul-Tokyo relations ahead of President Barack Obama’s visit to the region next week.